Invitation of comments from the public on changes being considered to the Insolvency and Bankruptcy Code, 2016
Background
An efficient insolvency resolution framework is key to economic stability and growth. In 2016, India took a landmark step in this direction with the enactment of a robust, modern, and sophisticated insolvency framework, the Insolvency and Bankruptcy Code, 2016 (“IBC” or “Code”). The IBC is the nation’s first comprehensive law to address the insolvency of corporate persons and individuals. The provisions of the Code were brought into force for the insolvency resolution and liquidation of corporate persons in December 2016. In December 2019, provisions for insolvency resolution and liquidation for individual insolvency were brought into force concerning personal guarantors (“PG”) to corporate persons. In addition, a separate customised framework was also notified under the Code for the financial service providers in November 2019. Further, in April 2021, a separate framework for pre-packaged insolvency resolution for micro small and medium enterprises (“MSMEs”) was introduced.
In November-December, 2021, the Ministry of Corporate Affairs invited public comments on issues related to the corporate insolvency resolution and liquidation frameworks, and the introduction of a cross-border insolvency framework. Since receipt of public comments in response to such invitation, further changes are being considered to bolster the frameworks under the Code.
Changes under consideration
To strengthen the functioning of the IBC, changes to the Code are being considered in relation to the admission of corporate insolvency resolution process (“CIRP”) applications, streamlining the insolvency resolution process, recasting the liquidation process, and the role of service providers under the Code.
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